Activision Blizzard appears well-positioned to deliver results

Video-game giant Activision Blizzard (Nasdaq: ATVI) badly underperformed the S&P 500 in October, amid a weak response to its new “Destiny” game – which still racked up hundreds of millions of dollars in sales.

But Activision Blizzard, known for many of the all-time, top-selling PC games (“World of Warcraft,” “Starcraft” and “Diablo III”) still has one of video gaming’s most enduring franchises in “Call of Duty.” The newest entry, “Call of Duty: Advanced Warfare,” debuted Nov. 3 and is likely to sell at least 14 million units (the series average).

Meanwhile, the company appears to be sitting on two largely unappreciated potential blockbusters. Its “Hearthstone: Heroes of Warcraft” could become the most consistently profitable mobile game ever. Even while limited to the PC and iPad, it attracted 20 million players and management says it could generate as much as $100 million in annual revenue. Also promising is Activision’s traditional PC title “Heroes of the Storm.”

With a forward-looking price-to-earnings (P/E) ratio of about 14, Activision Blizzard shares are trading at a discount, with investors overlooking a pipeline of games that could deliver stellar results. (The Motley Fool has recommended and owns shares of Activision Blizzard.)

Ask the Fool

Q: Some well-known companies in bankruptcy have their stock trading for peanuts now, but they might be moneymakers again one day. Might these companies make good investments? – M.H., Victoria, Texas

A: Usually not. When companies emerge from bankruptcy, holders of common stock tend to end up with nothing, while creditors and others might get some pennies on the dollar. They often emerge with new stock, too, leaving the old shares worthless.

My smartest investment

Years ago, I bought 100 shares of a stock that rose in value. Later, needing some money, I sold 50 shares. The proceeds represented my purchase cost for all 100 shares plus a little profit, so I considered my remaining 50 shares to be freebies, and risk-free, as I had already more than broken even on them. I think risk-free is the only way to own stocks. – P.C., via email

The Fool responds: Selling part of your holding to recoup the entire purchase price is certainly a strategy worth considering.

By selling to recoup your purchase price, you do eliminate any chance of an overall loss, but with fewer shares, you’ll reap a smaller profit as the stock rises.